How long are POHs depreciated over? Also, are there any guidelines for determining how much of a park can be depreciated as land improvements and such and how much can not be depreciated?
All dwelling units must be depreciated over 27.5 years. Even a 50-year old mobile home with a caved-in roof. That said, if/when you scrap the home, any remaining depreciation is immediately expensible.Here’s a tip that will help you: mobile homes are rarely ‘100% mobile homes.’ Usually they come with central (or window) heat and air, kitchen appliances, carpeting, drapes, and other improvements that you can depreciate over as short as 5 years. So talk with your accountant and prepare a depreciation schedule for your ‘wheel estate’ that accurately reflects what you’ve actually purchased, and the varying depreciation schedules of each.Do the exact same for the mobile home park (the ‘real estate’). The land value is, of course, not depreciable. But everything else is. You can establish fair market value for the undepreciable land by looking at comparable parcels of raw unimproved land that have sold in your area. Anything you’ve paid above this ‘raw land’ value for your real estate is either depreciable (improvements like signs, fences, roads, water pipes, water well houses, water pumps, sewer lines, club houses, etc. are 5 - 20 years), or the remainder is expensible as goodwill (15 years). So one way or the other, you get to write off everything you pay for your mobile home park above and beyond the raw land value.Again, a CPA can advise you on this and prepare/track your depreciation schedules. A good rule of thumb is that 60% - 80% of the purchase price of most mobile home parks (real estate) is depreciable/expensible. And, of course, 100% of your wheel estate is expensible.All the best,-jl-
Thanks, I had forgotten about all the stoves and refrigerators I own.